Entrepreneurs Opened More Businesses in 2023, Setting a New All-Time High on Yelp
For the first time every U.S. state surpassed its pre-pandemic levels of new business openings, signaling a new era of post-COVID recovery in the U.S.
January 2024
For more on the methodology for this report, click here.
The U.S. economy exceeded expectations in 2023, avoiding the much-predicted economic recession as inflation cooled and the unemployment rate remained low. Yelp forecasted back in August that entrepreneurs would break records in 2023, beating out 2022’s all-time high for new business openings. That strong momentum carried through the remainder of the year, marking the first time that every U.S. state surpassed its pre-pandemic levels of new business openings and signaling a new era of post-COVID recovery in the U.S. This growth is seen across all categories on Yelp, with exceptional new business growth for home services businesses, which beat the next-best performing category, local services, by 199K openings.
Business owners helped the national economy defy expectations in 2023, with new business openings up 20% compared to 2022. In fact, each month in 2023 set a new all-time high in business openings for its respective month since 2019. Diverse entrepreneurs also made their mark in 2023, with LGBTQ-owned (up 29%), Latinx-owned (up 28%), and Black-owned (up 24%) businesses outpacing the national average (20%).
2023 business openings set new all-time high
Business openings* by month on Yelp, 2019 – 2023
Home Services boom to meet increased consumer demand
While U.S. entrepreneurs across all categories opened more businesses in 2023, surpassing 2022's record, home services saw the highest new business growth with more than 278K openings.
Pandemic-era mortgage rates could be driving this growth, by motivating homeowners to put off buying a new property – a phenomenon also known as “the golden handcuff” – and instead invest in expanding their current home. For example, some homeowners might add a room, or change their floor plan by demoing walls or converting a basement into living spaces. In 2023, consumer interest on Yelp for remodeling related home services categories saw increases when compared to 2022, including excavation services (up 33%), demolition services (up 11%), and masonry and concrete services (up 11%).
To meet this increased consumer demand, home service providers opened new businesses across categories such as, carpenters (up 54%), masonry and concrete services (up 40%), contractors (up 33%), drywall installation and repair (up 30%), and demolition services (up 27%). Meanwhile, Yelp data shows decreases in new business openings for mortgage lenders (down 8%) and mortgage brokers (down 16%), potentially signaling a cooling of the real estate market.
“Golden Handcuff” phenomenon illustrated by new Home Services business trends
Change in business openings for select Home Service categories, 2023 vs. 2022
Every category on Yelp surpassed 2022 business openings, with the restaurant industry exceeding pre-pandemic business growth
People also continued to embrace travel and dining out in 2023. Hotels and travel business openings saw significant growth (up 28%) compared to 2022, as travelers set new records in 2023. Categories with notable growth in openings include private jet charter (up 136%), travel agents (up 52%), vacation rentals (up 35%), food tours (up 33%), and passport and visa services (up 26%).
Yelp data also shows that the restaurant and nightlife industry has surpassed its pre-pandemic baseline, indicating some of the hardest hit sectors have bounced back. When comparing 2023 business openings to both 2022 and 2019 respectively, food businesses (up 16% and 28%), nightlife businesses (up 11% and 7%), and restaurants (up 10% and 2%) all show strong signs of growth. Driving growth for restaurant business openings are desserts (up 66%), pop-up restaurants (up 66%), creperies (up 63%), hot pot (up 53%), and pasta shops (up 48%), compared to 2022 business openings.
New business openings spike across all categories, led by Home Services
Business openings* by month on Yelp, 2019 – 2023
Every state surpassed pre-pandemic business openings signaling a new post-COVID era
For the first time ever, every U.S. state, including Washington, D.C., experienced an increase in new business openings, when compared to both 2022’s record numbers and pre-pandemic levels (2019).
The top five states with the most significant percentage growth in new businesses compared to 2022 were West Virginia (up 37%), Wyoming (up 35%), Rhode Island (up 35%), Delaware (up 32%), and Idaho (up 29%). Home services showed up in the top five highest growth categories for each of these top states, reflecting the national trend.
Still, the most populous states in the country posted the highest total number of new business openings: California (116,522), Florida (82,494), Texas (79,416), and New York (38,196), as well as Georgia (32,581). Major metros in these states also topped the list for highest number of new openings in 2023 – Los Angeles (44,521), New York City (42,471), Miami (26,964), Dallas (24,322), and Atlanta (23,414).
For the first time, every state surpassed pre-pandemic business openings
Women started more businesses in 2023
From Barbie's box office record to the Beyoncé bump, to Taylor Swift's monumental year, women set new records and led major economic booms in 2023. Female entrepreneurs started more new businesses than ever, with women-owned businesses seeing an increase of 17% compared to 2022. With more than 58K business openings in 2023, the women-owned identity attribute is the most prolific on Yelp for new business openings.
This growth is seen across a wide array of industries, driven by hotels and travel (up 44%), home services (up 38%), local services (up 30%), event services (up 23%), and automotive services (up 14%). For the first time, women opened more new home services businesses than beauty businesses, indicating a shift as the home industry gains new momentum among female business owners.
Diverse entrepreneurs lifted local economies and outpaced the national average growth rate last year
As minority-owned businesses enrich communities and lift local economies, LGBTQ-owned (up 29%), Latinx-owned (up 28%), and Black-owned (up 24%) businesses saw growth above the national average compared to 2022. Asian-owned businesses (up 16%) also saw significant business openings across the country.
Diverse entrepreneurs open more businesses every year
Change in new business openings by identity attribute, 2023 vs. 2022
Looking at the top cities for minority-owned new business growth in 2023, these major cities showed up in the top five for at least two identity attributes: Orlando, Washington, D.C., Denver, Austin, and Miami.
Meanwhile, Los Angeles saw the highest total business openings for diverse entrepreneurs, ranking as the top city for Women, Latinx, LGBTQ, and Asian-owned total business openings. For Black-owned business openings, Los Angeles was beat out by Atlanta and New York City.
Minority-owned new businesses open across the U.S., Denver and Washington D.C. lead as top metros for growth
Change in new business openings by identity attribute, 2023 vs. 2022
With entrepreneurs pushing the U.S. into a new era of post-pandemic business growth, every U.S. state is feeling this forward momentum into the new year with strong growth across categories. Yelp will continue to track business openings and economic trends in 2024 to inform future predictions and reports.
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Methodology
Business Openings
Business openings refer to new business listings on Yelp in a given timeframe. The business listings are added by either business representatives or Yelp users. For understanding how business openings for a given location changed over time, openings are adjusted year-over-year, meaning openings are measured relative to the same time period in the previous period for the same business categories and geographic locations. This adjustment aims to account for seasonality. Yelp analyzed business openings in 2023, compared to 2022 through 2019.
Identity Attributes on Yelp
Business owners can self-select identity attributes to display on their business page by logging into their Yelp for Business account. Identity attributes used for this report are: Asian-owned, Black-owned, Latinx-owned, LGBTQ-owned, and women-owned. Users can find these businesses when searching by these attributes. These business attributes are opt-in only and can only be added by the business.
Consumer interest
Yelp measures consumer interest by looking at select actions users take in connection with businesses on Yelp: such as viewing business pages, or posting photos or reviews. Changes in consumer interest for home services categories were measured by comparing 2023 vs. 2022 across the U.S., focusing on each category’s share of all consumer actions in its root category or child category.
Downloadable static graphics can be found here.
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